Massachusetts Addendum to Lump Sum Agreement for Workers' Compensation
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FAQ
Under a lump sum contract, a single 'lump sum' price for all the works is agreed before the works begin. It is defined as a fixed price contract, where the contractors agree to execute the work for a stated total sum of money.
Low risk for the owner. 'Fixed' construction cost. Minimize change orders. Owner supervision is reduced when compared to Time and Material Contract. Construction can start before designs are complete and any consequent changes found necessary are the contractor's responsibility.
A lump-sum contract is normally used in the construction industry to reduce design and contract administration costs. It is called a lump-sum because the contractor is required to submit a total and global price instead of bidding on individual items.
A lump sum contract, sometimes called stipulated sum, is the most basic form of agreement between a contractor and a customer. A lump sum contract or a stipulated sum contract will require that the contractor agree to provide specified services for a stipulated or fixed price.
